Financial institutions (discontinued), Q4 1999

Loans to the public, defined as municipalities, households and non-financial corporations, increased by 2 per cent in the second quarter of last year. The biggest increase was in the finance companies, for which the increase in loans was 9 per cent. Over half of this increase, however, is due to a transfer of NOK 7 billion from a banks loan portfolio to a finance company. This transfer also explains why the banks increase in loans to the public was somewhat lower in the 4th quarter of 1999 than in the 3rd quarter. Nevertheless, the banks had an increase of 2 per cent in the 4th quarter. The state lending institutions also increased their loans by 2 per cent, while the insurance companies continued to reduce their loans. In the 4th quarter this reduction amounted to 11 per cent, compared with a reduction of 3 per cent in the 3rd quarter.

In 1999 loans to the public increased by 8 per cent, compared with an increase of 10 per cent in 1998. The banks had the biggest increase in loans at 9 per cent. The finance companies had an increase of 8 per cent, while the insurance companies loans decreased by 17 per cent, which is about the same as in the previous year.

Increase in total assets

Total assets in the financial institutions amounted to NOK 2.585 trillion at the close of 1999. This is NOK 140 billion more than in the 3rd quarter. Over half of this increase was in Norges Bank. In addition to Norges Bank, which nearly doubled its total assets in 1999, the insurance companies have had the biggest 4th-quarter increase at 9 per cent. In the other financial institutions, the changes were more modest.

The financial institutions aggregate total assets increased by 16 per cent in 1998. Part of this increase, however, must be seen in light of the new Accounting Act that was introduced on 1 January 1999. The change in the Act entailed that the valuation of financial current assets was altered from book to actual value. If we disregard Norges Bank, the insurance companies had the biggest increase in this period, increasing their total assets by 19 per cent. The banks and finance companies increased their total assets by 11 and 13 per cent respectively, while the state lending institutions had a slight decline.

Continued drop in the interest rate level

Preliminary figures from Norges Bank show a continued decline in the banks interest rate level in the 4th quarter of 1999. Both the commercial banks, including the Norwegian Post Bank, and the savings banks reduced their lending rates by 0.2 percentage points compared with the 3rd quarter. At the close of 1999, their lending rates were 7.5 and 7.7 per cent respectively. The average lending rates were respectively 2.2 and 2.3 percentage points lower than at the same point of time in 1998. In the 4th quarter of 1999 their deposit rates remained constant at 4.5 and 4.4 per cent respectively, 1.8 and 1.9 percentage points lower than in the 4th quarter of 1998. This means that the banks interest margin has declined by 0.4 percentage points in 1999.

The statistics are published quarterly.

Tables:

• Table 1 Financial institutions. Balance sheet by financial instruments. 31. December 1999. Billion kroner.
• Table 2 Financial institutions. Balance sheet by financial instruments. 31. December 1998. Billion kroner.